With the rise in the cryptocurrency and ICO market, crypto exchanges, which are integral to the market’s liquidity are also on an upward trend. Recent reports suggest that these exchanges charge anywhere between $1 to $3 million to list a token.
Crypto exchanges charges $50k-$3M, while Nasdaq charges $55k
In today’s crypto world, crypto exchanges play an extremely important and popular role. A registered exchange, on its way to create the path to liquidity rolls in money. For instance, one of the fastest growing crypto exchange Binance raised around $2 billion in just about six months.
Cryptocurrency exchanges have various ways to earn money among which listing the tokens of an ICO (initial Coin Offering) is one such lucrative option. For a token to be listed on an exchange, it would cost one somewhere around $50,000 to $3 million.
However, if we take a look at the application and entry fee of Nasdaq Capital Market, it charges about $55,000 to list up to 15 million shares. It is about same as its annual fees to stay listed on the exchange.
Given the fact that a token becomes more attractive the more liquidity it offers which means how easy it is for one to trade them. Hence, an ICO is most often judged to be successful on its exchange listing and a particular exchange as well.
It has been reported by various media sources that crypto exchanges charge a million dollar for every ICO that even sometimes gets extended to a $3.5 million to get integrated with a known mobile wallet.
Dying decentralization and rising inequality in opportunity
The revenue structure of crypto exchanges involves income from trading fees, deposit and withdrawal fees and commission among others like margins from order matching and setting pricing plans to traders.
Last year was a big year for ICO with more than 900 gone live. The investors of these ICOs go with the belief that their token will get listed on the exchange and they would be able to earn on their investments.
The credibility and price of an exchange usually depend upon its trading volume. According to the coinmarketcap that has about 200 exchanges listed, one of the most popular Binance has over $1.5 billion trading volume with close to 300 coins listed.
Another example is Bitfinex with the trading volume of $585 million with 50 tokens listed while Bittrex has the trading volume of $280 million and about 275 tokens.
Reportedly, in 2017 Coinbase made approximately $1 billion in profits and over $200 million were secured by Binance. Currently, almost all of crypto trading that would be more than 98 percent is done on centralized crypto exchanges such as Bitfinex, Upbit, and Binance, where about 5 percent cut of the deal also goes to the advisors.
Charging a fee is not wrong but such a number is plain too much. Millions just for a listing is completely unfair. Moreover, a huge fees also negates the equal opportunity factor as every project can’t afford such a huge amount.
Decentralized exchanges are a near term solution
However, the solution to this problem is the Decentralized Exchanges (DEX). Though it’s still a new concept and in a development stage there are a few popular names in the market that are working on this innovative exchange platform such as Bisq, IDEX, Waves DEX and Ether Delta among others.
These exchanges offer the similar services at a fraction of a price charged by centralized exchanges.
Do you think such an astronomical price for a token listing is valid on crypto exchanges’ part?
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Being an active participant in the Blockchain world, I always look forward to engage with opportunities where I could share my love towards digital transformation.